What credit score do you need for Shared Ownership?
This page is for informational purposes only and does not serve as financial advice. Please speak to your financial advisor for up-to-date information on your credit rating, and how this can be used to secure a Shared Ownership mortgage. All details are correct at the time of writing.
When applying for a Shared Ownership home, one of the key affordability factors that a mortgage lender will review is your credit score. This will give them an indication of your credit history, which is a valuable metric in understanding somebody’s financial situation.
But if you’re a first-time buyer – which many Shared Ownership applicants tend to be – you may not be familiar with your credit score, or what can cause it to rise and fall.
As the experts in all things Shared Ownership, we’re here to run through everything that you need to know about how your credit score works in partnership with getting you on the property ladder.
What is a credit score?
Put simply, a credit score is an indicator of how likely you are to repay your bills on time. It’s a three-digit number from 0 to 999, and most credit scores fall between the 300 to 850 range. Anything above 881 is considered good, while credit scores between 721 and 880 are designated as fair. However, different credit scoring providers may rank these ranges with their own terminology.
Credit scores below 500 are typically considered poor, but if you’ve used an online credit score checker and are presented with a number in this area, don’t panic! Your credit score can be improved through various means.
Also, some specialist bad credit score mortgage lenders will review your case individually and could still approve you for a Shared Ownership mortgage, despite being on the lower end of the credit score ranking.
Some of the factors that can negatively impact your credit score include:
- Missing payments and having a default recorded on your credit report
- Borrowing more money than you can afford and getting into debt
- Frequently opening new bank accounts
Do you need a good credit score for Shared Ownership?
While a high credit score will make you more likely to be accepted by mortgage lenders for a Shared Ownership mortgage, there is no universally accepted credit scoring metric that all lenders work to.
This means that you can still get a mortgage with a poor credit score – though it can be more challenging and requires you to either work with specialised bad credit score mortgage lenders, or be patient and increase your credit score organically.
How to improve your credit score
Generally, the best way to improve your credit score is to manage your money successfully. This will show mortgage lenders that you’re able to pay on time, and that you will be reliable when they provide you with a Shared Ownership mortgage.
There are a number of best practices when trying to improve your credit score, however, and incorporating as many of these as possible into your financial day-to-day will put you in a great position to get on the property ladder.
Only borrow what you can afford to pay back
This may seem like an obvious suggestion, but making sure not to overextend yourself with loans will keep your credit score in the green. You’ll only be able to take out a loan that the lender deems as suitable, but making sure to adhere to any payment terms is crucial for keeping your credit score high.
It’s the same principle with the other affordability checks that all Shared Ownership applicants go through: you should only buy the share of a property that you can comfortably afford.
Set up (and pay) direct debits
Direct debits are a great way to showcase regular, monthly payments as part of your overall credit report. When signing up for things like a phone contract or financing a car, paying on a monthly basis will help to build your credit score in the long-term.
Make use of credit cards
Credit cards are a great way to improve your credit score, or build on your score if you lack a lengthy credit history. Provided that you pay your balance on time, and don’t exceed your credit limit, a credit card will build credit sustainably.
Register to vote at your address
One of the less obvious ways to improve your credit score is to register to vote at your current address. The main UK credit reference agencies use the electoral register to verify your identity and address, and having this align with your actual address shows these entities that you’re a real person.
In addition, staying at one fixed address for longer periods of time improves your stability in the eyes of lenders (though this isn’t always possible, depending on your personal situation).
Begin your Shared Ownership journey today
If you’ve used an online credit score checker and think you’re ready to begin to process of getting on the property ladder, you’re in the right place. Browse our extensive range of properties to get an idea of which Shared Ownership location is right for you, and reach out to our friendly team if you need any further guidance.
This page is for informational purposes only and does not serve as financial advice. Please speak to your financial advisor for up-to-date information on your credit rating, and how this can be used to secure a Shared Ownership mortgage. All details are correct at the time of writing.